Poverty Still High, But Not Getting Worse

Median income is declining in the U.S., and inequality is growing, according to a new report.

FE_DA_120912SoupKitchen.jpg
By + More

The poverty rate stood at 15 percent in 2011, virtually unchanged from last year's 15.1 percent rate, according to numbers released by the Census Bureau on Wednesday. Likewise, the number of people below the poverty line held steady last year, at 46.2 million, statistically unchanged from last year's figure.

[Read about the disconnect between iPhone 5 and poverty news.]

The data come from the latest Census Bureau's Income, Poverty, and Health Insurance Coverage report, which comes after three consecutive years of increased poverty rates. In a call with reporters Wednesday, David Johnson, chief of the Census Bureau's Social, Economic and Housing Statistics Division, said that an improving job market is one factor in halting the rise of poverty. He points to three groups that showed declines in both poverty rates and the number of people in poverty: residents of the South, people who live in suburbs, and non-citizens. For all three groups, full-time, year-round employment increased alongside poverty declines.

"For those groups, where the poverty rate actually fell, there was a huge increase in the number of full-time, year-round workers," said Johnson. "So we think that this increase and shift from part-time to full-time could have kept that from rising."

Poverty lines differ by household size. For a two-parent family with two children, the poverty threshold in 2011 was $22,800. While poverty may not have increased last year, 15 percent is still relatively high. From 2000 to 2007, that rate fluctuated between 11 and 13 percent.

[See where the U.S. education system is lagging other countries.]

In addition to that high rate, the Bureau reported that real median household income declined by 1.5 percent last year to $50,054. Not only is that the second consecutive annual decline; it's 8.1 percent lower than in 2007, before the recession. These measures of poverty and income have wide gaps by race and ethnicity. Blacks had the highest poverty rate of any racial or ethnic group studied, at 27.6 percent, followed by Hispanics at 25.3 percent. These two rates dwarf those of Asians (12.3 percent) and non-Hispanic whites (9.8 percent). These differences are mirrored in income figures: median income for blacks was $32,229, and for Hispanics it was $38,624, compared to $55,412 for non-Hispanic whites and $65,129 for Asians.

In addition, some family types are particularly likely to live in poverty. More than one-third (34.2 percent) of families in households headed women without husbands were below the poverty line last year. While that's a high figure, it represents an improvement from 50 years ago. In 1962, half of families headed by a single mother lived in poverty.

While median income declined and poverty held steady, inequality grew in 2011. The Gini index, which measures inequality on a scale of 0 (perfect equality) to 1 (perfect inequality), grew by 1.6 percent last year, from 0.470 to 0.477. This is the first time this measure has shown an annual increase since 1993.

[Read how many jobs the U.S. is losing to China.]

A key factor in this trend was income growth at the top end of the spectrum. People in the top 20 percent grew their piece of the income pie by 1.6 percent (measured in equivalence-adjusted income, which takes into account household size), and people in the top 5 percent alone did even better, growing by 5.3 percent. Meanwhile, the share for the middle 60 percent of earners shrank by 1.5 to 2 percent for each group, and income was virtually unchanged, growing by 0.1 percent, for the lowest 20 percent.

Though the income picture is still bleak for many Americans, the number of uninsured Americans is shrinking. 15.7 percent of Americans were without health insurance in 2011, down from 16.3 percent the year before. In addition, 63.9 percent of Americans were covered by private plans, unchanged from 2010, which is a marked change from the last decade.

"This is the first time in last 10 years that rates of private insurance coverage has not decreased," said Johnson.